(CNSNews.com) – The U.S. Conference of Catholic Bishops dismissed the House Democrats’ plan to try to isolate funding for abortion in the health care bill as a “money-laundering system” that would do nothing to stop federal funding of abortion, an issue that could potentially derail health care reform.

The plan, known as the Ellsworth amendment after its author Rep. Brad Ellsworth (D-Ind.), attempts to serve as a compromise between pro-life Democrats led by Rep. Bart Stupak (D-Mich) and the party’s liberal, pro-abortion leadership. All of the health care bills currently before Congress allow for taxpayer funding of abortion.

The Ellsworth amendment claims to prevent federal funds from paying for abortion – Stupak’s main objection – by mandating that federal money be segregated from individuals’ premium payments and that abortions can only be paid for by using the premiums, not the federal subsidies.

The U.S. Conference of Catholic Bishops (USCCB), which speaks for the approximately 300 active bishops in the United States, sent a memo to congressional staff on Thursday about the issue. The memo, a copy of which was obtained by CNSNews.com, says that the Ellsworth amendment is not a “meaningful compromise,” because merely segregating the funds would not prevent federal money from being used to fund abortion.

“[O]n examination, it is not a meaningful compromise. It addresses none of the substantial criticisms offered by the Catholic bishops’ conference and other pro-life advocates for health care reform,” Richard Doerflinger, secretariat of Pro-Life Activities at the USCCB, wrote in the memo.

Those criticisms are that the bill (HR 3962) would use taxpayer dollars to fund abortion, both directly through the public option and indirectly through the generous health insurance subsidy program the bill creates.

In an Oct. 8 letter to Congress, the bishops wrote, “No one should be required to pay for or participate in abortion. It is essential to clearly include longstanding and widely supported federal restrictions on abortion funding/mandates and protections for rights of conscience. No current [health care] bill meets this test. … If acceptable language in these areas cannot be found, we will have to oppose the health care vigorously.”

Rep. Bart Stupak (D-Mich.) (AP Photo)

In the case of the bill’s public option, the Ellsworth amendment mandates that the government segregate federal subsidy payments from individual premiums. The bishops called this a “money-laundering system” because once premiums are paid into a public option, they become federal funds.

“While all funds in the public plan begin as private funds, in the pockets of taxpayers and purchasers, they all become federal funds once they are paid to the government (whether paid as taxes or as premiums) – and all abortions in the plan are paid for by the federal government,” the USCCB memo reads.

“So this money-laundering system, aside from making the operation of the public plan more unwieldy, does nothing to address pro-life concerns,” the bishops said.

For private health insurance plans, which can also be purchased with federal subsidies, the Ellsworth amendment would have the federal government segregate federal funds from individual premiums based on an estimate of the average cost of abortion procedures.

This arrangement apparently would enable the government to claim it is not paying for abortion by saying it never paid the abortion surcharge, which would be delineated on every American’s health insurance statement.

The bishops, however, state: “[T]he government’s approach of ‘segregating’ the supposed cost of abortion into a distinct ‘abortion surcharge’ charged to all purchasers only makes the mandatory payment of abortion in these plans even more specific and direct than if the purchaser had to pay it as part of an overall premium.”

Doug Johnson of the National Right to Life Committee (NRLC) told CNSNews.com that House Democrats were “desperately trying to disguise” the fact that their health care overhaul would allow the federal government to pay for abortions.

“When the public option pays for elective abortions, that is federal funding of abortion,” he said. “And that’s what they’re desperately trying to disguise.”

Johnson called the Ellsworth amendment a “fig leaf made out of cellophane,” adding that it was nothing more than a “last minute effort” to cloak the reality of the bill.

“The only thing that federal agencies can spend is federal funds,” he said. “The whole effort for months has been to disguise what they are doing, because it’s not a popular position. It doesn’t matter what you call it, it’s all the government.

“We anticipated all along that there would be a last-minute effort to cloak what they’re doing, and that’s what this is about,” said Johnson. “It’s simply camouflage. It’s a ludicrous hoax - for what purpose?

“To try to provide some political cover so that a few congressmen can claim they voted for something that prevented federal funding of abortion, even though the reality is they’re voting for a bill that will establish a nationwide federal agency program that will pay for abortion on demand, with government funds,” he added.

Stupak told CNSNews.com on Thursday that he and 40 other pro-life Democrats would continue to oppose the health care bill unless House Speaker Nancy Pelosi (D-Calif.) allows a floor vote on his amendment that would explicitly prohibit federal funds from going to insurance plans that cover abortion.